New Dimensions In Overland Transportation

Diminishing returns in management's fight to lower manufacturing expenses have added luster to savings that can be achieved in delivered costs through creative management of the distribution function. This is especially true for companies engaged in the production of bulk commodities, for which transport costs may represent 25 to 50% or more of total delivered price, A. E. Cascino, vice president of International Minerals and Chemical Corporation, recently gave an example of why top management in his firm is concerned with distribution: "The price of a ton of phosphate rock, f.o.b. mine, is about $7. The cost of warehousing, freight, and handling frequently totals an additional $11 . . . . If one of our competitors . . . discovers a way in which he can cut his distribution costs by $3, we're dead! Even if we wanted to offset our competitor's more efficient means of shipping with reduced f.o.b. price for our product-we don't have that much profit margin . . . ." In a special report on the revolution now occurring in transportation of goods, Business Week stated in its September 24 issue: "Moving and storing goods on their way from mine and mill through various sub-assemblies to their final markets costs anywhere from $50 billion to $75 billion a year- $100 billion if paperwork costs are included.